L B Foster : 4Q23 Earnings Presentation

L.B. Foster Company

Q4 2023 Earnings Presentation

Nasdaq - FSTR

March 5, 2024

Safe Harbor Disclaimer

Safe Harbor Statement

This presentation may contain "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements provide management's current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Sentences containing words such as "believe," "intend," "plan," "may," "expect," "should," "could," "anticipate," "estimate," "predict," "project," or their negatives, or other similar expressions of a future or forward-looking nature generally should be considered forward-looking statements. Forward-looking statements in this presentation are based on management's current expectations and assumptions about future events that involve inherent risks and uncertainties and may concern, among other things, the Company's expectations relating to our strategy, goals, projections, and plans regarding our financial position, liquidity, capital resources, and results of operations and decisions regarding our strategic growth initiatives, market position, and product development. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control. The Company cautions readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: any future global health crises, and the related social, regulatory, and economic impacts and the response thereto by the Company, our employees, our customers, and national, state, or local governments; a continuation or worsening of the adverse economic conditions in the markets we serve, including recession, the continued volatility in the prices for oil and gas, governmental travel restrictions, project delays, and budget shortfalls, or otherwise; volatility in the global capital markets, including interest rate fluctuations, which could adversely affect our ability to access the capital markets on terms that are favorable to us; restrictions on our ability to draw on our credit agreement, including as a result of any future inability to comply with restrictive covenants contained therein; a decrease in freight or transit rail traffic; environmental matters, including any costs associated with any remediation and monitoring of such matters; the risk of doing business in international markets, including compliance with anti-corruption and bribery laws, foreign currency fluctuations and inflation, global shipping disruptions, and trade restrictions or embargoes; our ability to effectuate our strategy, including cost reduction initiatives, and our ability to effectively integrate acquired businesses or to divest businesses, such as the recent dispositions of the Track Components, Chemtec, and Ties businesses, and acquisitions of the Skratch Enterprises Ltd., Intelligent Video Ltd., VanHooseCo Precast LLC, and Cougar Mountain Precast, LLC businesses and to realize anticipated benefits; costs of and impacts associated with shareholder activism; the timeliness and availability of materials from our major suppliers, as well as the impact on our access to supplies of customer preferences as to the origin of such supplies, such as customers' concerns about conflict minerals; labor disputes; cybersecurity risks such as data security breaches, malware, ransomware, "hacking," and identity theft, which could disrupt our business and may result in misuse or misappropriation of confidential or proprietary information, and could result in the disruption or damage to our systems, increased costs and losses, or an adverse effect to our reputation, business or financial condition; the continuing effectiveness of our ongoing implementation of an enterprise resource planning system; changes in current accounting estimates and their ultimate outcomes; the adequacy of internal and external sources of funds to meet financing needs, including our ability to negotiate any additional necessary amendments to our credit agreement or the terms of any new credit agreement, and reforms regarding the use of SOFR as a benchmark for establishing applicable interest rates; the Company's ability to manage its working capital requirements and indebtedness; domestic and international taxes, including estimates that may impact taxes; domestic and foreign government regulations, including tariffs; economic conditions and regulatory changes caused by the United Kingdom's exit from the European Union; geopolitical conditions, including the ongoing conflicts between Russia and Ukraine and Israel and Hamas; a lack of state or federal funding for new infrastructure projects; an increase in manufacturing or material costs; the loss of future revenues from current customers; and risks inherent in litigation and the outcome of litigation and product warranty claims.

All information in this presentation speaks only as of March 5, 2024, and any distribution of the presentation after that date is not intended and will not be construed as updating or confirming such information. L.B. Foster Company assumes no obligation to update or revise any forward-looking information, whether as a result of new information, future events, or otherwise, except as required by securities laws. The information in this presentation is unaudited, except where noted otherwise.

Non-GAAP Financial Measures

This investor presentation discloses the following non-GAAP measures:

• Earnings before interest, taxes, depreciation, and amortization ("EBITDA")
• Earnings before interest, taxes, depreciation, amortization, and certain charges ("Adjusted EBITDA")
• Net debt
• Gross Leverage Ratio per the Company's credit agreement
• Funding capacity
• New orders
• Book-to-billratio
• Backlog
• Free cash flow
• Organic sales growth (decline)
• Other certain metrics, as indicated, adjusted for non-routine items

The Company believes that EBITDA is useful to investors as a supplemental way to evaluate the ongoing operations of the Company's business since EBITDA may enhance investors' ability to compare historical periods as it adjusts for the impact of financing methods, tax law and strategy changes, and depreciation and amortization. In addition, EBITDA is a financial measure that management and the Company's Board of Directors use in their financial and operational decision- making and in the determination of certain compensation programs. Adjusted EBITDA adjusts for certain charges to EBITDA that the Company believes are unusual, non-recurring, unpredictable, or non-cash. The Company also discloses Adjusted EBITDA margin, which is Adjusted EBITDA as a percent of net sales, which is useful to demonstrate Adjusted EBITDA levels and growth relative to net sales. In the three months ended December 31, 2023, the Company made adjustments to exclude expenses from the exit of the bridge grid deck product line, bad debt provision for customer filing for administrative protection, and restructuring costs. In the twelve months ended December 31, 2023, the Company made adjustments to exclude the loss on divestitures, expenses from the exit of the bridge grid deck product line, bad debt provision for customer filing for administrative protection, and restructuring costs. The Company believes the results adjusted to exclude the items listed above are useful to investors as these items are non-routine in nature. Organic sales growth (decline) is a non-GAAP financial measure of sales growth (decline) excluding the effects of acquisitions and divestitures. Management believes this measure provides investors with a supplemental understanding of underlying trends by providing sales growth on a consistent basis. Management provides organic sales growth (decline) at the consolidated and segment levels. Portfolio changes are considered based on their comparative impact over the last twelve months, to determine the differences in 2022 versus 2023 results due to these transactions. The Company also excluded the impact of non-routine items from certain metrics as indicated, in order to provide insight to Company performance on a base level without these non-routine items, which is useful to investors to better understand performance. The Company views net debt, which is total debt less cash and cash equivalents, and the Gross Leverage Ratio, as defined in the Second Amendment to its Fourth Amended and Restated Credit Agreement dated August 12, 2022, and the Fourth Amended and Restated Credit Agreement dated August 13, 2021, as important metrics of the operational and financial health of the organization and believe they are useful to investors as indicators of its ability to incur additional debt and to service its existing debt. The Company discloses free cash flow as it is a non-GAAP measure used by both analysts and management, as it provides insight on cash generated by operations, excluding capital expenditures, in order to better assess the Company's long-term ability to pursue growth and investment opportunities. The Company defines new orders as a contractual agreement between the Company and a third-party in which the Company will, or has the ability to, satisfy the performance obligations of the promised products or services under the terms of the agreement. The Company defines backlog as contractual commitments to customers for which the Company's performance obligations have not been met, including with respect to new orders and contracts for which the Company has not begun any performance. Management utilizes new orders and backlog to evaluate the health of the industries in which the Company operates, the Company's current and future results of operations and financial prospects, and strategies for business development. The Company believes that new orders and backlog are useful to investors as supplemental metrics by which to measure the Company's current performance and prospective results of operations and financial performance. The Company defines book-to-bill ratio as new orders divided by revenue. The Company believes this is a useful metric to assess supply and demand, including order strength versus order fulfillment.

The Company has not reconciled the forward-looking adjusted EBITDA and free cash flow to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability and low visibility with respect to certain costs, the most significant of which are acquisition and divestiture- related costs, impairment expense, and changes in operating assets and liabilities. These underlying expenses and others that may arise during the year are potential adjustments to future earnings. The Company expects the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.

Non-GAAP financial measures are not a substitute for GAAP financial results and should only be considered in conjunction with the Company's financial information that is presented in accordance with GAAP. Quantitative reconciliations of EBITDA, adjusted EBITDA, net debt, funding capacity, and adjustments to segment results to exclude portfolio actions and one-time adjustments made are included in this presentation.

L.B. Foster Q4 2023 Earnings Presentation	2
March 5, 2024

L.B. Foster Overview

Innovating to solve global infrastructure challenges

2023 Guidance	Low	High	Results
and Results
Revenue	$ 530	$ 540	$ 544

• Founded in 1902, headquartered in Pittsburgh, Pennsylvania
• Locations throughout North America, South America, Europe, and Asia
• 18 principal plants, yards, and offices; ~1,100 employees worldwide2
• Critical infrastructure solutions provider focused on growing our innovative, technology-based offerings to address our customers' most challenging operating and safety requirements

$750 $600 $450 $300 $150

$0

2023 Sales by Region

($ in millions)

$41 $25 $13

$544

$464

United	United	Canada	Other	Total
States	Kingdom			2023
				Sales

	Adj. EBITDA1	$	29	$	31	$	32
	2024 Guidance				Low		High
	Revenue			$	525	$	560
	Adj. EBITDA1			$	34	$	39
	Free cash flow1			$	12	$	18
	Capex as a % of sales			2.0 %	2.5 %
	December 31, 2023 Financial Data
	Stock Price		$				21.99
	Shares Outstanding					11

Business Segments

In Q4 2023, the Company realigned its reporting structure through two segments:

Rail, Technologies,		Infrastructure	$600
and Services		Solutions*
			$400
			$200
			$0

*Includes historic Precast Concrete Products and Steel Products and Measurement (now Steel Products business unit) reporting segments

2023 Sales by Segment

($ in millions)

$232$544

$312

Rail	Infrastructure	Total 2023
		Sales

Market Capitalization	$	236
Debt	$	55
Cash	$	3
Enterprise Value	$	289
TTM Revenue	$	544
TTM Adj. EBITDA1	$	32
EV / Revenue		0.5
EV / Adj. EBITDA1		9.1
Covenant Leverage		1.7x

Data shown above in millions, except stock price and ratios.

L.B. Foster Q4 2023 Earnings Presentation	1)	Refer to safe harbor disclaimer slide and related reconciliations within the appendix regarding non-GAAP measures.	3
	2)	Location and employee data as of December 31, 2023.
March 5, 2024
		Note figures may not foot due to rounding.

Opening Remarks

John Kasel

President and CEO

L.B. Foster Q4 2023 Earnings Presentation	4
March 5, 2024

Executive Summary - Q4 2023 Highlights

What we've accomplished…

Net sales of $134.9M down 1.7% YoY ( 7.7% organic increase1)

Gross profit of $29.0M, up 8.5% YoY; gross margin of 21.5% up 200 bps YoY

	Strong operating cash
$6.1M in adjusted	flow of $22.1M in Q4;
EBITDA1 down 18.4% YoY	$40.7M in 2H 2023
Net loss of $0.5M	Net debt1 down $16.0M in
favorable $43.5M YoY	Q4 to $52.7M
Backlog1,2 remains healthy	Gross Leverage Ratio1
at $213.8M	improved to 1.7x, down
	from 2.0x last quarter

Acquired operating assets

of Cougar Mountain

Precast, LLC for $1.6M

Repurchased 70,865

shares of common stock

for $1.4M, or 0.7% of outstanding shares

Impact of strategic execution evident in organic sales growth, margin expansion and cash generation

L.B. Foster Q4 2023 Earnings Presentation		1)	Refer to safe harbor disclaimer slide and related reconciliations within the appendix regarding non-GAAP measures.	5
March 5, 2024	2)	Q4 2023 backlog reflects a $31.3M decline from divestitures of Ties and Chemtec and the discontinued bridge grid deck product line.

Executive Summary - Full Year Highlights

What we've accomplished…

Where we're going…

Net sales of $543.7M up

9.3% YoY

Gross margin of 20.7% up

270 bps YoY

$31.8M in adjusted

EBITDA1 up 31.4% YoY

Net income of $1.3M favorable $47.0M YoY

Net debt1 down $36.3M in 2023; strong operating cash flow of $37.4M for the year

Gross Leverage Ratio1 improved to 1.7x from 2.8x last year

Repurchased 134,208

shares of common stock

for $2.3M, or 1.2% of outstanding shares

Divested Chemtec and

Ties businesses and

acquired Cougar

Mountain Precast, LLC

Realigned management and reporting structure into two segments: Rail, Technologies, and Services and Infrastructure Solutions

2024 Guidance

Net Sales $525M - $560M

Adjusted EBITDA1 $34M - $39M

Free Cash Flow1

$12M - $18M

Cap Ex % of Sales

2.0% - 2.5%

Final year of $8M Union

Pacific payment

Strong, positive momentum established in 2023 expected to carry into 2024

L.B. Foster Q4 2023 Earnings Presentation	1)	Refer to safe harbor disclaimer slide and related reconciliations within the appendix regarding non-GAAP measures.	6
March 5, 2024

Financial Review

Bill Thalman

Executive Vice President and CFO

L.B. Foster Q4 2023 Earnings Presentation	7
March 5, 2024

Fourth Quarter Results

As of and for the quarter ended December 31, 2023:		YoY Δ
$ in millions, unless otherwise noted
SALES	134.9	(2.3)
GROSS PROFIT	29.0	2.3
GROSS PROFIT MARGIN	21.5%	200 bps
SG&A	27.2	3.9
NET LOSS ATTRIB. TO FSTR	(0.4)	43.5
ADJ. EBITDA1	6.1	(1.4)
OPERATING CASH FLOW	22.1	13.8
NEW ORDERS1	105.5	(32.3)
BACKLOG1,2	213.8	(58.5)

• Net sales declined 1.7% due to a 9.4% decline from divestitures partially offset by a 7.7% organic increase1
• Gross profit margins expanded 200 bps to 21.5% due to an uplift in organic sales and improved mix and pricing
• SG&A increased due to variable incentive costs to reset in 2024, $1.0M UK bad debt provision, and $0.7M UK restructuring expense
• Adjusted EBITDA of $6.1M down 18.4% YoY due primarily to higher incentive expense in SG&A
• Net loss attributable to FSTR improved $43.5M due to $37.9M deferred tax allowance and $8.0M impairment in 2022
• Cash provided by operations increased to $22.1M for the highest quarterly level in 4 years

Structural improvement in profitability contributing to improved cash flow generation

L.B. Foster Q4 2023 Earnings Presentation		1)	Refer to safe harbor disclaimer slide and related reconciliations within the appendix regarding non-GAAP measures.	8
March 5, 2024	2)	Q4 2023 backlog reflects a $31.3M decline from divestitures of Ties and Chemtec and the discontinued bridge grid deck product line.

Year over Year Change in Sales and Adj. EBITDA1

$150

$125

$100

$75

$50

$25

$0

Changes to Net Sales

($ in millions)

$137.2	$12.9	$10.6	$134.9

Q4 2022 Sales	Divestitures	Legacy Business	Q4 2023 Sales
	1

$10

$8

$6

$4

$2

$0

Changes to Adjusted EBITDA1

($ in millions)

$1.1

$2.4

$7.5

$6.1

5.5% of	4.5% of
sales	sales

Q4 2022 Adj.	Divestitures	Legacy Business	Q4 2023 Adj.
EBITDA			EBITDA

Divestitures accretive to EBITDA margins, while legacy business impacted by incentives / UK weakness

L.B. Foster Q4 2023 Earnings Presentation		$ in millions unless otherwise indicated. Figures may not foot due to rounding.	9
March 5, 2024	1)	Refer to safe harbor disclaimer slide and related reconciliations within the appendix regarding non-GAAP measures.

Sales and Gross Profit Trend - Trailing 4 Quarters

Adjusted Sales1 and YoY Organic Growth1,2

($ in millions)

$175

$150			+13%	+13%
		$148	$147	+8%
$125	$132	$134	$137		$135
+12%

$115

$100

$99

$75

$50

$25

$0

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023

Q3 2023

Q4 2023

			Adjusted Gross Profit1
	$40									22%
						21.8%		21.5%
								21.2%
				20.8%
	$35								20%
					20.2%	$32
					19.5%		$31
millions)	$30								$29	18%
		$28
		17.7%	$27					Gross
($ProfitGrossin								ProfitMargin
	16.6%
	$25								16%
		$23			$23
	$20									14%
	$16
	$15									12%
	$10									10%
	Q1 2022	Q2 2022	Q3 2022	Q4 2022	Q1 2023	Q2 2023	Q3 2023	Q4 2023

Margin expansion year over year due to improved business portfolio, organic growth and pricing initiatives

L.B. Foster Q4 2023 Earnings Presentation		$ in millions unless otherwise indicated. Figures may not foot due to rounding.	10
March 5, 2024	1)	Refer to safe harbor disclaimer slide and related reconciliations within the appendix regarding non-GAAP measures.
		2)	Year over year growth rate represents adjusted organic sales growth